Over the last two years, an increased demand in construction, labour shortages, supply chain delays and rising inflation rates have had a significant impact on the price of building materials and construction costs in Australia.
A recent report from CoreLogic for Q3 2022 showed national residential construction costs increased at the record rate of 11% from September 2021 to September 2022. This means to rebuild a home in the current market could cost up to 11% more than it did 12 months ago!
Given the recent price increases in construction, property owners are being urged to review their current home insurance cover and ensure the sum of insurance adequately reflects the current cost to rebuild their property.
If you underestimate the rebuild cost for your property and the sum insured falls short, you will be left to pay the difference between your claim-payout and the actual rebuild cost.
People or businesses that took out insurance policies prior to the pandemic, and who may not have reassessed their policies and coverage in the last couple of years, are particularly vulnerable to being underinsured.
For reconstructions, there is an increased risk of delayed works, which may force insurance policyholders to relocate to alternative accommodations for longer than expected periods during reconstruction of their home.
Some tips for reassessing your home insurance policy:
- Use a home building sum calculator (like this one on of our website) to calculate the sum you should be insuring your home for
- Assess the sum of your home insurance policy annually to ensure the rebuild cost is consistent with current construction costs
- With the rise of extreme weather events, check your home is covered for fires, floods and other natural disasters
- Check the period your insurer allows for temporary accommodation (most policies will cover up to 12 months) to ensure you would be covered up until the rebuild or repair job is complete.
The family home is generally the most significant investment most people make so it is important to ensure you have cover that will protect you and your family should something happen.
At Centrewest, our experienced team of home and contents insurance brokers can help tailor a policy to suit your personal needs. Contact us today to find out more.